EXHIBIT 4.14
AGREEMENT BETWEEN BERKLEY PETROLEUM, INC.,
HILTON PETROLEUM, INC., TRIMARK RESOURCES INC.,
STB ENERGY, INC. AND KOB ENERGY, INC.,
DATED JUNE 10, 2002
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BERKLEY PETROLEUM. INC.
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
June 10, 2002
Letter of Understanding ("Letter")
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ #▇ ▇▇▇ #▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Gentlemen:
By Exploration Agreement, dated January 30, 1998, as amended, ("Agreement")
between ▇▇▇▇▇▇▇▇▇ Resources, LLC and Berkley Petroleum, mc., ("Berkley"),
successor in interest to Berkley Petroleum Corp., et al., the undersigned
parties or their predecessors agreed to participate in the drilling of an
exploratory well(s) in the East Lost Hills Prospect located in ▇▇▇▇ County,
California.
Attached, as Exhibit "G" to the Agreement is a 1982 AAPL form 610 Model Form
Operating Agreement ("JOA"). The JOA sets forth the procedures by which Test
▇▇▇▇▇ are proposed and drilled. The JOA provides for a non-consent penalty of
400% along with additional penalties prescribed in Article XV B. of the JOA.
In accordance with the Agreement and JOA, the undersigned parties agreed to
drill the East Lost Hills #4 and #9 ▇▇▇▇▇ (hereafter collectively called "ELH
▇▇▇▇▇"). In drilling the ELH ▇▇▇▇▇, Hilton Petroleum, Inc., STB Energy, Inc.,
Trimark Resources and KOB Energy, Inc. (collectively called "Defaulting
Parties") failed to pay their proportionate share of the Cash Calls and invoices
submitted in accordance with the JOA. Based upon the Operator's records for the
ELH ▇▇▇▇▇, the Defaulting Parties currently owe the joint interest account the
following amounts:
ELH #4 WELL ELH #9 WELL
------------- -------------
Trimark Resources $ 237,486.57 $ 164,011.21
STB Energy. Inc $1,246,800.76 $ 861,056.56
Hilton Petroleum, Inc. $1,633,285.48 $1,127,573.63
KOB Energy. Inc. $1,016,724.13 $ 861,056.56
------------- -------------
Balance Owed $4,134,296.94 $3,013,697.96
The balances owed for the ELH ▇▇▇▇▇ will be adjusted once all ▇▇▇▇▇▇▇▇ are
reconciled and finalized. The following items will be included to calculate the
payout balance for the ELH #4 Well (a) the outstanding, unpaid ELH #4 Well
balance identified above; (b) pending invoices; (c) the cost of testing,
completing, equipping, operating and maintaining the ELH #4 Well; (d) the cost
of drilling, completing, equipping, operating and maintaining water disposal
facilities associated with the ELH #4 Well; and (e) a 300% non- consent factor
("ELH #4 Payout"). The following items will be included to calculate the payout
balance for the ELH #9 Well (a) the outstanding, unpaid ELH #9 Well balance
identified above; (b) pending invoices; (c) the costs of testing, completing,
equipping, operating and maintaining the ELH #9 Well; (d) the cost of drilling,
completing, equipping, operating and maintaining water disposal facilities
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associated with the ELH#9 Well; and (e) a 300% non-consent factor ("ELH #9
Payout"). The term "Payout" refers to either the ELH #4 Payout or the ELH #9
Payout whichever is applicable in the context used.
To resolve the unpaid balance owed by the Defaulting Parties in connection with
the ELH ▇▇▇▇▇ and permit testing and possible completion of the ELH ▇▇▇▇▇ to
proceed, the parties agree as follows:
- Berkley, OXY Lost Hills Inc., Ceniarth Inc., North Arm Resource Inc.,
Paramount Resources USA Inc. and Bellevue Resources, Inc. (collectively
called "Carrying Parties") agree to assume their proportionate share of
each Defaulting Parties' working interest in the ELH ▇▇▇▇▇ as of the date
AFE's for drilling the ELH ▇▇▇▇▇ were first approved;
- in consideration of the Carrying Parties agreement to assume the Defaulting
Parties' interest in the ELH ▇▇▇▇▇, the Carrying Parties shall be entitled
to recover the ELH #4 Payout from the ELH #4 Well and the ELH #9 Payout
from the ELH #9 Well;
- Should one of the ELH ▇▇▇▇▇ fail to reach one-hundred fifty percent (150%)
of its respective Payout, the unrecouped portion of Payout for such well
will be treated in the following manner:
1. If the unrecouped portion of Payout is equal to or greater than
one-hundred fifty percent (150%) of the costs incurred by the Carrying
Parties in drilling, testing, completing, equipping, operating and
maintaining the applicable ELH Well, no further recoupment shall
occur, or
2. If the unrecouped portion of Payout is less than one-hundred fifty
percent ( 150%) of the costs incurred by the Carrying Parties in
drilling, testing, completing, equipping, operating and maintaining
the applicable ELH Well, the unrecouped portion up to one- hundred
fifty percent (150%) of Payout shall be transferred to the Payout
balance of the remaining producing ELH Well.
- The Carrying Parties' willingness to assume the Defaulting Parties' working
interest is limited to costs and expenses associated with the ELH ▇▇▇▇▇ and
is not intended to apply to any other well(s) drilled or proposed pursuant
to the Agreement or the JOA;
- A Defaulting Party may at anytime prepay its then current ELH #4 Payout
balance or ELH #9 Payout balance thereby reinstating its working interest
in the applicable well. Thereafter, all operations involving the reinstated
working interest in the applicable well shall be conducted in accordance
with the JOA. Upon Payout of both ELH ▇▇▇▇▇ this Letter shall terminate;
- This Letter provides the exclusive remedy by which the Carrying Parties
will recoup from the Defaulting Parties the costs and expenses associated
with the ELH #4 Payout and the ELH #9 Payout. Should additional ▇▇▇▇▇ be
proposed pursuant to the Agreement and JOA, the Defaulting Parties will be
permitted to elect whether to participate or non-consent the proposed
operation as provided for in the JOA.
- All other terms and conditions of the Agreement and the JOA shall remain
unchanged.
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Agreed to and accepted this 19th day of June, 2002.
BERKLEY PETROLEUM, INC.
/s/ ▇▇▇ ▇▇▇▇▇
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By: ▇▇▇ ▇▇▇▇▇
Title: Sr. VP, Domestic Operations
DEFAULTING PARTIES:
Agreed to and accepted this 14th day of June. 2002.
HILTON PETROLEUM. INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
Agreed to and accepted this 14th day of June. 2002.
TRIMARK RESOURCES INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
Agreed to and accepted this _____ day of June. 2002.
STB Energy, Inc.
By:
----------------------------
Title:
-------------------------
Agreed to and accepted this ____ day of June. 2002.
KOB Energy, Inc.
By:
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Title:
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